Financial Guidelines for Retirement
- Managing the money that you have inside your IRAs and other retirement plans is perhaps the single most important aspect of retirement planning. Those who are able to make their assets grow consistently over time will have a much easier time making ends meet than those who keep all of their savings in CDs and guaranteed instruments. It is important to keep at least a small portion of your portfolio in equities or equity mutual funds of some sort during the majority of your retirement so that you have some assets that can grow faster than inflation over time. Only those with very large portfolios can get away with living off of the interest from guaranteed instruments like CDs and government securities.
- Retirees who do not carry long-term care insurance of any kind may end up severely depleting their assets if they require skilled or hospice care for any length of time. Medicare covers very little or none of these costs, and the Medicaid system is already overloaded and requires the forfeiture of most of the patient's assets. Long-term care insurance is the best defense against this expense, which can cost up to $50,000 per year in some areas of the country. Those who are not insurable under one of these policies may be able to add a rider on to their life insurance policy or purchase an annuity that pays out partial long-term care benefits from the contract.
- If you think that Social Security is going to support you during retirement, you're probably in for a surprise. The monthly payments you receive from this program should be viewed only as a supplementary source of income to go along with your company pension and personal savings. You can get an estimate of your Social Security benefits from the Social Security website. This will give you some idea of what you can expect to receive, and therefore how much you need to save beforehand.
- No amount of planning or funding will help you if you cannot control your spending during retirement. Those who accumulate large amounts of debt after they stop working may have no means of paying this off. In some cases, this can become a burden to relatives who must foot the bill. Risk-averse retirees who have not paid off their mortgages may want to consider using some of their savings to do so. Those with high-interest credit card debt should almost certainly take this course as well. It is possible to live on a relatively low income if you have no mortgage payment or other debt.
